Australian gas producer Po Valley Energy has announced a major re-organisation and asset ownership structure for all of its Italian oil and gas exploration and production interests.
Po Valley said the initiative would give PVE shareholders a stake in a much enlarged and more liquid operator to be chaired by renowned UK energy executive, Mr James Parsons.
The centrepiece of the proposed restructure will see UK-AIM listed and 54%-owned Po Valley subsidiary, Saffron Energy (LON: SRON) become the three way host vehicle for its own existing Italian energy assets as well as three new Italian assets owned by PVE, and three gas exploration and two gas production assets owned by AIM-listed Sound Energy. Sound was awarded “Best Performing Company” on the AIM in 2016.
Po Valley will emerge with a 51% stake in the enlarged Saffron, which as a result of the proposed transaction will now be chaired by Sound Energy Chief Executive, Mr James Parsons. In five years at the Sound helm, Mr Parsons grew that company’s market capitalisation from less than £50m to over £550 million.
The proposed re-organisation is currently non-binding subject to a range of regulatory and shareholder approvals involving all stakeholders. If it proceeds, the transaction is expected to complete early next year. Saffron will remain suspended from the AIM while the transaction process proceeds.
The following Board changes are intended as part of the proposed transaction:
• James Parsons, Sound Energy’s Chief Executive Officer, will be appointed Non-Executive Chairman of Saffron
• Sara Edmonson, Po Valley’s Chief Executive Officer and currently a Non-Executive Director of Saffron Energy, will assume the role of Saffron CEO
• Fiona MacAulay, Echo Energy Plc’s Chief Executive Officer, formerly COO of Rockhopper Exploration Plc, will be appointed a Non-Executive Director of Saffron.
Asset changes
Saffron, as a current Po Valley subsidiary, already owns 100% interest in the Sillaro and Sant’ Alberto gas projects and 90% in the Bezzecca gas production field. The reconfiguration will see Po Valley inject its remaining 80% Selva and 100%-owned Teodorico and Torre Del Moro gas exploration projects into the enlarged entity. Sound will contribute its Maria Goretti, Laura, and Dalla gas exploration projects and two Italian gas production fields, Rapagnano, and San Lorenzo, into the equation.
The current status of each of the pooled assets is as follows:
Production and development: Selva onshore gas field (2C 17 Bcf), Teodorico offshore Adriatic gas field development (2C 47 Bcf), Sillaro (2P+C 3.3 Bcf ), Bezzecca (2P+C 6.0 Bcf), Sant’ Alberto (2P 2 Bcf), San Lorenzo (2P 0.1 Bcf), Rapagnano (2P 1.0 Bcf) and Exploration: Torre Del Moro, Laura (most likely 17.1 Bcf), Dalla (most likely 24.6 Bcf) and Maria Goretti (most likely 32.8 Bcf).
On transaction completion prior to any new capital raising, Po Valley on a proforma basis will have a 51% interest in the enlarged Saffron, Saffron AIM shareholders will have a 16% stake and Sound Energy a 33% holding.
It is proposed to eventually rename Saffron as Coro Energy Plc (“Coro”).
Po Valley Energy will retain outside of the deal, proceeds from the recent sale of its interests in the Cadelbosco di Sopra and Grattasasso oil permits in northern Italy, amounting to $1.7 million. That transaction is awaiting Ministry approval .
Po Valley Chairman, Mr Michael Masterman, said the proposed acquisition by Saffron of Sound Energy’s and Po Valley’s remaining Italian natural gas and oil assets as contemplated in the transaction, added significant larger assets to the Saffron portfolio.
“From day one, this transaction will transform Saffron into a materially larger funded natural gas and oil company with critical mass through an exceptional balanced portfolio of high quality assets. The expanded company will own and manage a significantly larger Italian portfolio of natural gas fields and oil and gas exploration assets, positioning itself as a mid-cap regional gas producer and explorer. Key local executive staff from each of Sound Energy Italy, Po Valley Operations and Saffron will be retained.
“The proposed addition of James Parson (CEO of Sound Energy Plc as Chairman and Fiona MacAulay (former COO Rockhopper) to the Board will greatly enhance Saffron’s financial and technical depth. The newly enlarged Saffron will be well equipped to quickly deliver on its growth ambitions and I am confident that they will result in significant value accretion to our PVE and Saffron shareholders alike.”
